Carbon pricing, climate disclosure and COP26: Businesses outline key asks for Covid-19 recovery policy
The Aldersgate Group - an alliance of dozens of business and civil society leaders - has published a new briefing outlining key policy changes and low-carbon investments it believes should be made to ensure the UK's recovery from Covid-19 produces a greener, more inclusive and resilient economy.
Corporate members of the Aldersgate Group include BT, Tesco, IKEA, Sky, Marks & Spencer’s and John Lewis Partnership. Also supporting the briefing are the likes of WWF, Woodland Trust and National Grid.
On the policy piece, the new briefing, entitled ‘Seize the Moment’, calls for Ministers to publish a robust carbon price trajectory for the 2020s. Chancellor Rishi Sunak confirmed at the latest Budget that the Carbon Price Support will continue at £18 per tonne until 2022, at which point a more “ambitious” price linked to the EU ETS is hoped to be introduced. However, £18 is notably short of the current global average of £24, and UK-EU negotiations around pricing post-2022 have reportedly turned sour. Further clarity in this space, the Aldersgate Group claims, would cut the cost of low-carbon investment, guarantee continued market stimulation and generate extra wiggle-room for the Treasury.
To complement stronger carbon pricing, the briefing recommends financial penalties for the developers of projects with high embedded or operational carbon footprints, and of projects which cause nature degradation. Work with the Bank of England and Green Finance Institute to better embed climate stress tests and to tackle key investment barriers is also mooted.
Regulations to drive more resource-efficient and energy-efficient products are additionally recommended, including deterrents to the production of inefficient batteries, tyres and electronics and to the production of non-recyclable, short-lifespan goods. Many businesses are failing to make the financial case for circular, low-carbon, energy-efficient products stack up due to outdated policy, the briefing notes.
Elsewhere, the briefing outlines several areas in which investment would produce not only the short-term economic benefits necessary to pull the UK out of recession, but to “level up” opportunities and wellbeing across all regions and to align with long-term climate targets.
Similarly to the green jobs report published by the Local Government Association (LGA) this week, the briefing highlights the opportunities associated with creating a national retrofitting scheme for buildings and a revamped skills strategy that improves the pipeline of talent for low-carbon industries. Other areas touted for priority investment include public transport and active travel, broadband and scale trials of emerging technologies such as carbon capture and hydrogen. In each of these fields, The Aldersgate Group states, investment would not only stimulate employment but regional regeneration, improved wellbeing and enhanced international competitiveness.
The briefing goes on to reiterate several of The Aldersgate Group’s ongoing calls to action, including mandating climate disclosure in line with the Task-Force on Climate-Related Disclosures (TCFD) by 2022 and moving forward the UK’s ban on the sale of new petrol and diesel vehicles. On the former, the UK’s Green Finance Strategy includes expectations for publicly listed companies and asset owners to disclose climate risk and impact data by 2022 but no legal mandate. On the latter, Ministers are planning to officially move the existing deadline from 2040 to 2035, in line with Committee on Climate Change (CCC) recommendations, at COP26 – but the Aldersgate Group is pushing for a 2030 deadline, citing opportunities for job creation in both the auto manufacturing and the electric vehicle (EV) charging infrastructure sectors alongside reduced healthcare costs as a result of cleaner air. A 2030 deadline has previously been urged by the Mayors of London, Manchester, Liverpool and the West Midlands, as well as Green Alliance.
The Aldersgate Group’s continued call for the UK to show low-carbon ambition on a global stage is also re-iterated in the context of both ongoing post-Brexit trade negotiations and a delayed COP26.
The publication of the briefing comes as Whitehall is finalising the UK’s Covid-19-related economic recovery plans, due to be outlined later this month. With unemployment set to rise once the furlough scheme peters out and lockdown having highlighted both social disparities and environmental problems, pressure is mounting on the Government to deliver a package which prioritises people and planet alongside profit.
The Aldersgate Group’s briefing notably refers to natural resources and human wellbeing as “critical goods”, highlighting the importance of healthy systems for resilience against future shocks. It additionally emphasises a desire for Government to collaborate with businesses, local authorities, NGOs and trade bodies to maximise the benefits of its plan, rather than acting in isolation.
“The UK government is faced with a unique opportunity to show that we are not returning to ‘business as usual’ through a recovery package that accelerates green economic growth,” Legal and General Investment Management’s (LGIN) analyst for global ESG and public policy, Alexander Burr, said.
“Over recent weeks, businesses and investors have been pledging their willingness and support for this agenda. The government should build on this foundation, bringing forward mandatory climate reporting and broadening its reach. Investors like LGIM need greater transparency and comparability from companies on their climate-related risks and opportunities, to direct capital into ‘green’ projects at scale. As we have seen lately, there is such a thing as being too late – it is time to act now.”